Global shares rise despite economic growth, rate worries

AP , Monday 17 Apr 2023

Global markets rose moderately Monday, although worries continued about economic growth and inflationary pressures.

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A currency trader passes by the screens showing the foreign exchange rates at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Monday, April 17, 2023. (AP)

 

France's CAC 40 rose less than 0.1% in early trading to 7,522.58. Germany's DAX gained 0.2% to 15,830.74. Britain's FTSE 100 added 0.5% to 7,911.91. U.S. shares were set to drift higher with Dow futures up less than 0.1% at 34,059.00. S&P 500 futures rose 0.1% to 4,168.75.

Traders are focused on companies' upcoming earnings reports and worry about how inflation might affect moves by the Federal Reserve and the world's other central banks on interest rates.

“Earnings expectations for this quarter are not brilliant,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. “But the good news is, the expectations are driven by conversations with corporate executives which love sounding pessimistic, so that when the results come in better than expected, the market reaction could be positive despite soft results.”

Japan's benchmark Nikkei 225 inched up nearly 0.1% to finish at 28,514.78. Australia's S&P/ASX 200 edged up 0.3% to 7,381.50, while South Korea's Kospi rose 0.2% to 2,575.91. Hong Kong's Hang Seng added 1.7% to 20,782.45. The Shanghai Composite gained 1.4% to 3,385.61.

“Markets suffer from more heat than light as hyper-sensitivity of Fed policy projections to U.S. data continues to infuse out-sized volatility,” said Tan Boon Heng at Mizuho Bank.

China’s central bank kept the one-year medium-term lending facility rate unchanged at 2.75%, suggesting economic growth data to be released Tuesday won't be too alarming.

“Investors remain more concerned about weak inflation, implying subdued demand recovery post-reopening. Hence sentiment remains downbeat, compounded by the fact that ex-China recession risks remain high,” said Stephen Innes, managing partner at SPI Asset Management.

High interest rates stifle inflation by slowing the economy, raising the risk of a recession and dragging on prices for investments.

Last week, a top Fed official said inflation remains far too high and more tightening may be needed. Christopher Waller, a member of the Fed’s governing board, also said that even after hikes to rates end, they will likely need to stay high for longer than markets expect.

After his comments, traders built bets that the Fed will raise rates at its next meeting in May, instead of taking its first pause in more than a year.

A report on Friday also showed U.S. shoppers cut their spending at retailers more than expected. Much of that was due to falling gasoline prices.

In energy trading, benchmark U.S. crude fell 43 cents to $82.09 a barrel. Brent crude, the international standard, declined 43 cents to $85.88 a barrel.

In currency trading, the U.S. dollar inched up to 133.91 Japanese yen from 133.75 yen. The euro cost $1.0978, down from $1.0997.

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